FROM MAGAZINE: Need for SPEED for high-tech logistics

In this highly demanding “need-it-yesterday” world of high-tech cargo where product life-cycles are ever-shrinking, air freight plays a critical role. To cater to this demand, the warped-up speed at which high-tech products are manufactured and flooded in the market requires the co-operation and support of an agile and responsive supply chain network.
Surya Kannoth

When a new iPhone is announced, especially at high-volume times of the year like the holiday season, the clock starts ticking faster-than-the-speed-of-light for its logistics team. On November 3 last year, when the iPhone X was launched, Apple’s logistics team monitored hundreds of flights, thousands of carrier delivery hubs and tens of thousands of delivery vehicles – just to make sure that its fulfillment rate stood at 100 percent.

That’s the kind of pressure that logistics partners catering to high-tech products have to go through to ensure the timely delivery of shipments. “The high-tech industry is one of the most demanding industries when it comes to speed, accuracy and visibility due to consumers’ behavior. End customers can’t wait anymore for the product to arrive at retail points of sales, they pre-buy it and book it online, weeks before it is released in the markets,” states Amer Abu Obeid, regional director – Europe, Saudia Cargo. The Middle Eastern airline ranks among the world’s leading specialist airfreight carriers and flies high tech shipments through the year from the US, Europe and Asia into the Kingdom of Saudia Arabia and the region.

Moving computers, semiconductors and other high-tech products around the globe requires a well-orchestrated network of logistics stakeholders to take advantage of peak market cycles. From the speed at which they arrive at the destination country to the speed they move through customs, the product needs to be kept moving to effectively manage dynamic product life cycles. Customs clearance, import and export regulations, documentation and classification, tariffs, currency exchange, coordination with multiple trading partners, unfamiliar regulations, even the new distribution models – all these stages must be dealt with seamlessly.

“The high-value nature of hi-tech goods demands both speed and visibility, particularly for the shipper, his customer and the freight agent. In the case of new product launches, there is an added need for the utmost security in handling, due to commercial sensitivity in the pre-market stocking phase,” explains Vivien Lau, executive director, Hactl.

Given Hong Kong’s strategic location, Hactl is very accustomed to handling pressures during product launch phases where the demand for delivery peaks. “Our staff has developed a great deal of experience in product launch support. Our facility has a plentiful spare capacity to handle more throughput, particularly the freighters that are often chartered in for sudden and short-term traffic peaks caused by new product launches. And any problems that might occur in landing slots availability at HKG can easily be balanced by Hacis providing efficient and cost-effective RFS links to other airports in the region,” said Lau.

Lau further informs that Hactl has a recognised capability to speedily process smaller hi-tech shipments through its express facility, and have the added resource of Hacis value-added logistics subsidiary which provides complimentary customised solutions.

Hong Kong Air Cargo Terminals Limited (Hactl), one of the world's leading air cargo terminals with the unique world-class facilities, highly efficient operation, and innovative technology, is a major transhipment hub for high-tech goods. Tens of thousands of high value and high-tech air cargo pass through SuperTerminal 1 every day and the terminal ensures that security is never compromised.

Electronic products are generally prone to heavy pilferages, often to the tune of 0.5-2 percent, due to the high value and quick saleability of the product in the unofficial market space. To contain such thefts, the air cargo industry is taking stringent steps.

“Hactl takes security extremely seriously, and this is a topic that has been a major focus right from the outset in 1978. It took on a new level of importance and investment with the opening of the USD 1 billion SuperTerminal 1 in 1998 when the inbuilt security measures such as the comprehensive use of CCTV cameras, central monitoring suite and dedicated staff monitoring 24/7 were industry leading moves. In addition, we have a large high-security area and restricted and monitored access to all cargo areas. We have continued to upgrade all systems and equipment, as well as increasing physical security staffing, and taking steps to secure our data systems from hacking. Hactl's staff are all directly employed with constant training to upgrade skillsets; they are educated to understand their responsibilities and execute them to the highest standards,” said Lau.

“Safety of shipments will always be one of the most important elements of the airfreight industry, strictly following the operating manual, sufficient and suitable packaging, arriving in cargo facility ready for carriage, minimizing the waiting time, swift clearance are only a few of the many steps Saudia Cargo adopts to ensure the safety of high-tech products while transported on flights and via cargo facilities,” added Obeid.

Specialised solutions for hi-tech cargo
Last July, global logistics player DHL set up DHL Semiconductor Logistics, an operation combining various existing services into an end-to-end supply chain solution covering inbound and outbound logistics for chip manufacturers. The suite of services covers the entire value chain from inbound to manufacturing facilities through to final distribution to end users and provides end-to-end visibility of products, full compliance with international regulations and maximum security of sensitive and high-value goods. It also launched a global capital support center with teams in Europe, Asia Pacific and the US.

In a press statement issued then, president of DHL’s technology sector, Rob Siegers, had said, “With more than 3,000 dedicated employees and 50 facilities worldwide, we have built extensive infrastructure and expertise for the semiconductor industry.”

“With our new offer, we connect DHL’s broad capabilities, enabling us to individually service our customers along their complete supply chain in a cost-efficient way. This becomes crucial for an industry that requires special logistics to be a competitive differentiator.”

DHL said its new semiconductor teams are experienced in the unique handling and transportation requirements of the industry and offer round-the-clock proactive monitoring supported by a specifically designed IT solution leveraging the latest technical developments.

DHL Customer Solutions & Innovation semiconductor business development Doug Whaley said, “In light of the challenges the industry is facing when it comes to supply chain management, the new center allows us to provide our customers with a truly holistic view of their supply chain and effectively manage their logistic needs.

“Together with the data on our customers' logistics movements, we can identify potential issues early and consistently optimize logistics costs,” Whaley added.

Capitalising on opportunities
In an attempt to seize opportunities, airfreight carriers and logistics providers are now responding with new routes and services to manufacturing hubs, especially in the Asian continent.

Last year, AirBridgeCargo doubled its online network in Asia Pacific in the last two years to 12 destinations, with flights to Tokyo, Seoul, Singapore, Hanoi, Phnom Penh, Hong Kong, Shanghai, Beijing, Chengdu, Chongqing, Zhengzhou and most recently Taipei. The Taipei route has seen strong demand, particularly for hi-tech products, and is now carrying 1,000 tonnes a month on the route.

Meanwhile, IAG Cargo will be launching a new direct flight between Madrid and San Francisco, making it the only carrier to offer a direct route between the two cities, from summer 2018. An A330-200, operated by Iberia, will service the route three times per week offering capacity of up to 14 tonnes per flight. The 2018 summer schedule will be further enhanced by additional wide body capacity between IAG Cargo’s hub in Madrid and Tel Aviv (TLV). The TLV service will benefit from an increase in wide body flights from the existing three frequencies per week to daily services; increasing capacity by an additional 20 pallets each week.

David Shepherd, commercial director, IAG Cargo, commented, “San Francisco has a well-established technology hub, with computer and electronic products being California’s top export category in 2016. California is also a vital market for exports, contributing to over $2 trillion of US goods and services exports last year. We anticipate that the new route will offer a welcome boost to tech and SME exporters transporting their goods into Europe and across our wider network, with the new flight increasing the number of routes out of our Spanish gateway to 54.”

It is expected that the San Francisco route will also carry products such as machinery parts, chemicals and transport equipment. For the first year, the thrice-weekly MAD-SFO service will be operated from the end of April through to the end of September.

Also, UPS, a global leader in logistics, expanded its Worldwide Express package service to reach 124 countries and territories, providing an earlier delivery option for customers to more locations. This is expected to benefit businesses in the fast-paced high-tech industries where it operates as it gives flexibility over their supply chain.

“A smart global logistics network is key to the markets in the Indian Subcontinent, Middle East and Africa (ISMEA) region that continue to focus on building stronger infrastructures and adopting business-friendly policies in efforts to foster further growth,” said Mohammed Kamal, Middle East Country Manager, UPS in a press statement.

In 2017, imports to India grew 21 per cent – to nearly $42 billion – compared to 2016. That growth comes from multiple industries including electronics and industrial machinery. Businesses that are part of these rapidly growing industries can use the newly expanded express service to receive orders earlier than before. In the Asia Pacific region, South Korea is one of 14 countries included in the expansion of UPS Express service. South Korea continues to lead the way in the auto electronics market, the UPS Express expansion will afford automotive aftermarket manufacturers and distributors located in major industrial areas a competitive edge by connecting them more quickly to other partners across the supply chain. Customers in Europe will benefit from faster shipping time to growth economies in Asia and Latin America. UPS is committed to investing $2 billion in its European network by 2019, and this investment has already made UPS faster on more than 350 city pairs between 27 European countries.